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» VISIT US ONLINE @ DSNEWS.COM 95 IN THE NEWS Senior RMBS Trader Convicted of Fraud e office of the Special Inspector Gen- eral for the Troubled Asset Relief Program (SIGTARP) announced that Jesse Litvak, a registered broker-dealer and former manag- ing director at New York investment bank Jefferies Co., Inc. (Jefferies), was sentenced to 24 months in federal prison and ordered to pay a $1.75 million fine in connection with his conviction for defrauding consumers trading in residential mortgage backed securities. "For nearly three years, Jesse Litvak lied over 70 times to numerous Jefferies custom- ers, cheating them and stealing their inves- tors' money," stated U.S. attorney Deirdre M. Daly. "While Litvak was being paid mil- lions as a trader and managing director, he defrauded dozens of victims, resulting in over $6 million in losses to investors. e victim investors included pension funds for teachers, firefighters, police officers, and other state or municipal employees, as well as taxpayer- provided bailout funds that helped our nation to recover from the 2008 financial meltdown." Litvak was found guilty on 10 counts of securities fraud and one count of TARP fraud in March. According to the evidence presented at trial, Litvek spent more than two and a half years engaged in a scheme to defraud investors. He relied on two different forms of misrepresentation to accomplish his goals. First, as a broker-dealer, only Litvak was aware of the selling and asking prices of the bond he was dealing in. He used that information to misrepresent the asking and selling price to the buyer and seller, pocketing the difference between the two prices that he reported. Second, Litvak took bonds held in Jeffer- ies' inventory and sold them to RMBS buyers only after inventing a fictitious third-party seller. e fake seller allowed Litvak to charge the buyer an extra commission for Jefferies that the firm was not entitled to because it was trading bonds already inside its inventory. "is sentence serves as a warning bell to those who risk engaging in such corrupt prac- tices. We hope that this prosecution will act as a forceful disincentive to market partici- pants tempted to commit securities fraud." Pennsylvania RANK: 12 90+ Day Foreclosure Unemployment Delinquency Rate Rate Rate JUNE 2014 2.59% 2.29% 5.7 YEAR AGO 2.74% 3.11% 7.5 YEAR-OVER-YEAR CHANGE -5.4% -26.3% -1.8 Top County MONROE COUNTY 90+ Day Foreclosure Delinquency Rate Rate JUNE 2014 2.54% 3.19% YEAR AGO 2.42% 3.58% YEAR-OVER-YEAR CHANGE 5.0% -10.9% Top Core-Based Statistical Area EAST STROUDSBURG, PA 90+ Day Foreclosure Delinquency Rate Rate JUNE 2014 5.02% 9.34% YEAR AGO 5.66% 12.33% YEAR-OVER-YEAR CHANGE -11.4% -24.2% note: The 90+ day delinquecy rate is the percentage of outstanding mortgage loans that are seriously delinquent. The foreclosure rate is the percentage of outstanding mortgage loans currently in foreclosure. State rank is based on the June 2014 foreclosure rate. All fi gures are rounded to the nearest decimal. The unemployment rate refl ects preliminary June 2014 fi gures released by the Bureau of Labor Statistics. All other data courtesy of LPS Data & Analytics. IN THE NEWS Homes 'Seriously Underwater' Down in 2nd Quarter In a positive sign for the housing market, RealtyTrac reported a decrease nationwide in homes that were classified as "seriously underwater," down to 9.1 million homes in the second quarter of 2014, representing 17.2 percent of all homes nationwide. e number is a decrease from the 17.4 percent of under- water homes recorded in the first quarter. e classification is given to homes where the combined loan amount secured by the property is at least 25 percent higher than the property's estimated market value. Negative equity in distressed properties is also down. Fewer distressed properties had negative equity in the second quarter, with 44 percent of all properties in the foreclosure process seriously underwater—down from 45 percent in the first quarter of 2014 and down from 57 percent in the second quarter of 2013. e share of foreclosures with positive equity decreased to 34 percent in the second quarter, down from 35 percent in the first quarter. "Home price appreciation has slowed in the last few months in many of the markets with the most underwater homes, slowing the pace at which homeowners are recover- ing equity lost during the Great Recession," said Daren Blomquist, VP at RealtyTrac. "For instance, annual home price apprecia- tion in California was at 16 percent in May 2014, compared to a high of 31 percent in July and August of 2013. In Arizona, home price appreciation has slowed to 6 percent annually, compared to a high of 24 percent last year." "In addition, many of the properties that are seriously underwater are in a deep negative equity hole that will take some time to dig out of," Blomquist continued. "e average loan- to-value on the 9.1 million homes seriously underwater was 133 percent, and the average loan-to-value on the homes in foreclosure that are seriously underwater was 134 percent." States with the highest percentage of resi- dential properties seriously underwater in the second quarter were Nevada, Florida, Illinois, Rhode Island, and Michigan. On the other end of the spectrum, homes with at least 50 percent equity held steady from the first quarter at 9.9 million in the second quarter of 2014, representing 18.8 percent of all properties with a mortgage. Rhode Island RANK: 9 90+ Day Foreclosure Unemployment Delinquency Rate Rate Rate JUNE 2014 3.62% 2.38% 7.7 YEAR AGO 4.24% 3.17% 9.6 YEAR-OVER-YEAR CHANGE -14.5% -25.1% -1.9 Top County PROVIDENCE COUNTY 90+ Day Foreclosure Delinquency Rate Rate JUNE 2014 4.47% 2.88% YEAR AGO 5.24% 3.86% YEAR-OVER-YEAR CHANGE -14.6% -25.4% Top Core-Based Statistical Area PROVIDENCE-NEW BEDFORD-FALL RIVER, RI-MA 90+ Day Foreclosure Delinquency Rate Rate JUNE 2014 4.17% 2.28% YEAR AGO 4.24% 3.17% YEAR-OVER-YEAR CHANGE -1.7% -28.2% note: The 90+ day delinquecy rate is the percentage of outstanding mortgage loans that are seriously delinquent. The foreclosure rate is the percentage of outstanding mortgage loans currently in foreclosure. State rank is based on the June 2014 foreclosure rate. All fi gures are rounded to the nearest decimal. The unemployment rate refl ects preliminary June 2014 fi gures released by the Bureau of Labor Statistics. All other data courtesy of LPS Data & Analytics.

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